WeWork has named its interim chief executive, David Tolley, to the post of permanent CEO as the financially struggling global flexible workplace provider renegotiates leases with landlords to stem a cash flow drain.
Tolley became interim chief executive after the former chief, Sandeep Mathrani, left in May for private equity firm Sycamore Partners after three years on the job at WeWork.
The appointment makes Tolley the third permanent WeWork chief executive. Adam Neumann, who co-founded the company in 2010, was ousted in 2019 amid corporate governance concerns that led to a failed attempt for the New York-based company to go public at the time.
Tolley most recently was finance chief of global satellite services provider Intelsat from 2019 to 2022 and previously was head of finance at OneWeb, another satellite firm. He was a partner at global private equity giant Blackstone Group from 2000 to 2011 and a vice president at investment banking firm Morgan Stanley.
In over 25 years of his career, he has helped in “creating and executing strategies and operational improvements that drive value, cash flow, and revenue,” WeWork said Monday in a statement.
Even so, WeWork considered other candidates before deciding to appoint Tolley as permanent CEO, a company spokesperson told CoStar News, without giving further details.
“Over the past few months, we have taken decisive and focused actions to improve our business,” Tolley said in the statement. “The steps we are taking now to achieve our goals not only help us achieve profitability and sustain growth, but will position us to serve our members better for the long term. I emphatically believe we’re on the right path, already gaining momentum and seeing promising results from our efforts.”
Tolley’s appointment comes as WeWork in August warned that “substantial doubt exists" about its ability to continue as a going concern unless it can improve liquidity and profitability over the next 12 months.
Tolley has said cash rent and tenant costs continue to be WeWork’s “primary challenge and obstacle” to its profitability and free cash flow. WeWork’s rent expenses represented 74% of its revenue and two-thirds of its second-quarter operating expenses.
Besides renegotiating nearly all its leases after it has exited or amended 590 of them since the fourth quarter of 2019, WeWork recently missed interest payments totaling about $95 million. The company said that was a deliberate attempt to help start conversations with some lenders as it's already doing with landlords.
“David is a proven leader, with an exceptional track record of running complex and high-impact businesses, and has brought immense energy, discipline, and focus to WeWork since stepping into the role on an interim basis in May,” Paul Keglevic, chair of WeWork’s board of directors, said in the statement. “We are confident that David is the right leader for this pivotal moment and in his ability to drive WeWork’s continued transformation.”
Keglevic, a WeWork board member, was appointed the board chair effective Sept. 1, WeWork said. He replaces Daniel Hurwitz, who stepped down from the board in August.